Friday Aug 23, 2019
NEW YORK: The Wall Street sell-off accelerated Friday afternoon after US President Donald Trump threatened new retaliation against China, exacerbating recession worries due to the escalating conflict.
Near 1815 GMT, the Dow Jones Industrial Average was down more than 500 points, or 1.9 percent at 25,744.62.
The broad-based S&P 500 also slid 2.1 percent to 2,861.51, while the tech-rich Nasdaq Composite Index sank 2.6 percent to 7,781.56.
The big losses came as the yield on the two-year US Treasury note again climbed above the yield on the 10-year note, a warning sign of possible recession.
Trump lashed out on Twitter and vowed to respond later Friday to China's new tariffs on American goods that were in retaliation for new US tariffs announced earlier this month.
Addressing leading US companies in China including UPS and Amazon, Trump said, "Our great American companies are hereby ordered to immediately start looking for an alternative to China," Trump tweeted.
"We don't need China, and, frankly would be far ... better off without them."
The outburst came after Beijing announced punitive tariffs targeting $75 billion worth of US imports and ranging from five percent to 10 percent, timed to take effect in two steps, September 1 and December 15, in tandem with the US measures.
Trump also reacted angrily to a widely-anticipated address by Federal Reserve Chair Jerome Powell in which the Fed chief pledged to act to ensure that the US economic expansion continued, but avoided specific promises, including Trump´s call for deep interest rate cuts.
"As usual, the Fed did NOTHING!" Trump said on Twitter.
"My only question is, who is our bigger enemy, Jay Powel or Chairman Xi?" Trump said, misspelling the Fed chief's name in the unprecedented attack.
Art Hogan, chief market strategist at National Securities, said the latest in Trump's almost daily attacks on Powell and the Fed is far more severe.
"When the president attacks the his own nominated chair and calls him an enemy, that is a whole new flavor of aggression, and not one any of us have seen in our lifetime," Hogan said.
Hogan said the tweetstorm about China was also troubling. While the mandate to US companies to exit China may amount to little more than rhetorical bluster, "things are getting worse, not better" on trade.
Apple, which has a significant footprint in China, led the Dow lower, losing more than four percent. American Express, Caterpillar, Nike and Microsoft were among the other big losers, shedding more than three percent.